Property tax delinquencies highest in Northeast, South

Residential and commercial property tax delinquencies are slightly higher in the Northeast and South than in the Midwest and West, but improving economic conditions are keeping the national delinquency rate in check, according to a report by Lereta.

The percentage of land lots with property tax delinquencies in the Northeast and South are approaching 9% in both cases, whereas in the West the delinquent property tax rate is almost 7% and in the Midwest it’s just shy of 6.5%.

A delinquency rate of 10% or above would be considered high, so these rates are in line with expectations. A stronger U.S. economy and stabilized unemployment rates may be a factor in the tax collection success, said Terry Cason, Lereta’s data modeling analyst.

In the Northeast, 804,867 out of 6,373,394 or 8.9% of the parcels Lereta reviewed in 1,543 jurisdictions are delinquent. In the South, 3,378,129 out of 38,483,343 or 8.8% of the parcels in 454 jurisdictions have unpaid property taxes.

In contrast, 300,373 of 4,381,645 or just 6.9% of the parcels Lereta reviewed in the West are delinquent. In the Midwest, 408,868 of the 6,363,394 or 6.4% of the parcels have property taxes that went unpaid.

In the U.S. as a whole, 4,892,237 out of 58,256,536 or 8.4% of the parcels Lereta reviewed are delinquent. The review is based on data collected between Oct. 1, 2016 and Oct. 1, 2017.

Property taxes are becoming an increasing concern for homeowners and the mortgage industry, as Congress considers changes to the tax code that would eliminate state and local tax deductions. The tax burden could be so great in some areas that borrowers would consider moving to avoid it.

Tax delinquencies point to strain on borrowers’ ability to repay and have implications for mortgage companies’ underwriting, escrow services and portfolio management. Liens on properties related to unpaid taxes are a big concern for mortgage lenders because they supersede other liens.